The G20 and the WTO: The Way Forward

The G20 and the WTO: The Way Forward

There are active debates on the significance of the G20 as a global economic forum and their continued role to reform global economic governance since inception. Their impact on the global economy has been evaluated through their outputs. Trade has been one such area where a lot of questions and criticisms have been raised on the role of the G20. Despite the G20 pledging their support for the multilateral rules-based trading system, the success rate relating to trade issues has been glaringly dismal. They have been unable to resolve the issues surrounding the World Trade Organization (WTO), particularly the conclusion of the Doha Development Round (DDA) (agriculture, special and differential treatment, subsidies, intellectual property and services) which commenced in 2001 and by some accounts is still ongoing, the question of WTO reforms, and, recently, the escalating trade tensions between the US on the one hand, and China, EU, Canada and Mexico on the other.

The G20 forum for heads of states was formed after the 2008 financial crisis. Before upgrading to heads of states level, it was first a group of Ministers of Finance that was formed in the aftermath of the 1997-8 Asian financial crisis. At its inception, the forum’s main focus was on financial issues. However, the mandate of the G20 has since broadened from financial issues to other global issues including trade. This expansion has made it increasingly hard to focus on strategic issues. In their efforts to contribute to trade, the G20 has introduced initiatives that supported the WTO’s programs such as the WTO’s Trade Facilitation Agreement and the G20’s Strategy on Global Trade Growth amongst others. Despite these efforts, the G20’s impact on trade has been limited, if any at all. Hence the important question, is the G20 the right forum to resolve the challenges being faced by the WTO and the global trading community?

The G20 has certainly proved that it has the ability and flexibility to solve crises – a form of crisis management club– the 2008 financial crisis is a good example. But can this feat be replicated to solve rising global trade tensions before they become a full-blown trade war? There are certain things the G20 can do to alleviate some these tensions, notwithstanding its limitations:

1. The G20 has a representation of both developed and developing countries from the different regions hence they should try to craft long-term solutions for the institution. Bolder stances geared towards serious deliberations on trade are needed. Thus, if the G20 can develop a reform agenda and associated (medium term) processes with credibility considering the absence of trust among the main players, it would be a step to trying to defuse existing tensions. In addition to that, the G20 can also develop a mechanism to manage tensions among the major players eg Trump – Xi, and Trump -Junker ‘ceasefires’ to curb escalating

trade tensions. G20 members are uniquely placed to establish such a mechanism. They are also in a position to negotiate and engage with China and the United States as both these countries are members of the G20.

2. Consistency and continuity of trade-related initiatives. The G20 should address escalating trade tensions in a systematic way. Adopt initiatives to stop the bilateral trade war and these initiatives should speak to one another no matter the presidency to ensure consistency. Initiatives have more impact if they are not isolated from each other than when there are coordinated and consistent.

3. As one of the main deadlocks is consensus-based decision-making rule, the G20 albeit smaller group could take the lead and find a solution to reaching consensus on outstanding issues under the Doha Development Round.

4. Recent attempts (Canadian Initiative) at the reform discussion have not been fully representative, – in that, significant participants who are important to the reform discussion were excluded such as South Africa, China and the United States. In the wake of such initiatives, it is important for the G20 as the leading group to initiate the reform discussions and invite other non-G20 stakeholders for solid reforms.

At this juncture, it is critical that the G20 should play its role and ensure that the WTO as a multilateral rules-based system should not be allowed to fail. The WTO is an essential institution that adds value to the global trading community and not only that, it has been one of the most successful institutions particularly when it comes to the dispute settlement function which has been the pillar for the organization.